Newsonomics: 11 questions the news business is trying to answer in 2018

No, the saga of the Los Angeles Times isn’t the only story in the newspaper world. It’s just that in its breathtaking oddness, it consumed the beginning of our year. Let’s begin with one question about the future of the Times, but then move on to other early-in-the-year questions that may tell us lots more about the business-of-news year ahead.

What’s at the top of PSS’s to-do list?

It’s been a week of almost eerie quiet in L.A., as the reality of new owner Patrick Soon-Shiong sinks in. The Guild’s elected its local leadership and the L.A. Times newsroom sees that it barely dodged the bullet of major Tronc reorganization.

Tronc announced Tuesday that it would concentrate all page makeup and design in Chicago, following the centralization models now becoming standard among chains, with GateHouse the national leader in that movement. That will be mean the elimination of more local jobs.

In addition, as reported by Chicago media critic Robert Feder, Tronc’s Tim Knight emphasized a salary review: “Over the next six weeks, while positions are being determined in line with our plan, we expect each local newsroom to review base compensation; where appropriate each newsroom will make pay increases reflecting either change in responsibility and/or adjusting to market.”

Why might that review be happening now? Count two big reasons: the reorganization and coming job cuts — and the unprecedentedly successful unionization of the L.A. Times in January. Tronc’s message to anyone thinking of leading a unionization charge at its other papers: “All pay changes for staffers not governed by collective bargaining will go into effect on April 1.”

While journalists in Baltimore, Chicago, Hartford, New York, and Orlando await the changes, in L.A., sources report “a palpable optimism.” And esteemed former Times publisher Tom Johnson weighed in with his hope on Facebook. (“My sense is that far better days may be ahead. I so hope so.”)

Who can blame them, after 20 years of Chicago-based rule and a decade of mismanagement and wavering strategies?

But no one has any idea what the new owner of the Times will do — most likely including the owner himself.

The brilliant biotech billionaire is but a novice in publishing. Consequently, who he hires to lead the business and the newsroom will tell us much about how much of that optimism may be maintained. Feelers to potential new editors have begun, as trusted Soon-Shiong advisers begin to explore the field, sources tell me.

In one sense, the Times can take a deep breath. Soon-Shiong’s deal with Tronc includes 18 months of shared transition services, I’m told. That would include the continuation of the Arc platform, licensed from The Washington Post. The paper launched it in late January.

If Shiong isn’t obsessed with quarterly financial returns, he can continue to reassure Times employees of a considered — and funded — transformation ahead. Will he offer the same kind of “runway” to the Times that Jeff Bezos offered his wary Washington Post troops five years ago? His initial letter set a good tone, but when will he pay an in-person visit?

Will he offer further reassuring steps, like embracing the paper’s Washington bureau? That team now looks like it could become part of the new Times, when it and its sibling the San Diego Union-Tribune, formally split from Tronc in either late March or early April.

Times seller Michael Ferro had been actively planning to close that bureau. Tronc had been in talks with both Axios and another significant D.C. news player, wanting to syndicate content and cut costs. That Axios/Tronc deal is no longer in the works, and it’s unlikely Ferro will find a high-profile partner.

It’s Ferro’s follow-on steps after the sale that Soon-Shiong may want to watch closely.

For instance, Tronc still owns, we believe, LA.com. And Ferro has recently talked about providing his newly rehabilitated Tribune Interactive CEO Ross Levinsohn with “hundreds” of content creators to make his new, if still hazy, syndication play real.

Takeaway: It’s almost time to place your bets in the game of Billionaire Bingo, a diversion I first mentioned five years ago. Will L.A. get a Bezos, Taylor, or Henry, or an Adelson? Or some other new breed entirely?

Is it just the L.A. Times that’s in journalistic turmoil, or is it all of California?

While the Times hogged all the attention, the state’s other big publisher — Digital First Media — should be getting more national attention. Alden Global Capital, DFM’s owner, continues to cut to a number, a profit number, which it’s been able to maintain even as the newspaper business absorbed a brutal 2017.

In southern California, its eleven titles (including some meaningful and once-proud local papers like the Long Beach Press-Telegram and the Orange County Register) now will pay about 250 journalists, down from about 380 only last year.

In the Bay Area, the once nationally prominent Mercury News is — almost unbelievably — down to 41 in the newsroom. Another 65 are counted as “East Bay” employees, given DFM’s super-clustering of newsrooms. That means its Bay Area News Group has concentrated editing and design in one location, and lots of regional reporting is “shared.”

The net result: “That leaves BANG with no K-12 reporter, no higher education reporter, no health reporter, and no one covering Santa Clara County government. It also significantly limits coverage at San Jose’s City Hall and entirely eliminates coverage in some of the region’s smaller neighboring cities, including Sunnyvale, Cupertino, Campbell and San Jose’s Rose Garden, Almaden, Cambrian and Willow Glen neighborhoods.” You know, Cupertino, an incorporated city of 58,000, hometown of a little concern called Apple.

Takeaway: The Times drama has provided good copy, but the destruction of the Mercury News deserves a moment of attention, if not a moment of silence. The L.A. Times newsroom still houses more than 400 journalists — about 10 times the Merc, amazingly. As recently as 10 years ago, it was the Merc that paid about 400, while the Times, at its height, paid 1,100.

Not that long ago, the San Jose paper proclaimed itself “The Newspaper of Silicon Valley.” Silicon Valley has done quite well, becoming the global economic engine and driving great regional affluence. But the economically fecund region has become — in less than a decade — a news desert.

Is it California, or is it the whole West Coast?

Advance Publications’ Oregonian, the largest daily in Oregon, just reduced its staff by 11, bringing it to 80. “It’s with a very heavy heart that I bring you this news,” said Oregonian editor Mark Katches. “Today, the positions of 11 of our colleagues in the newsroom are being eliminated.” These cuts follow ones in 2015 and in 2013, when The Oregonian flipped its switch on less-than-daily full edition print publishing.

Katches, who served as a top editor for the nationally respected, Bay Area-based Center for Investigative Reporting before taking the Oregonian job in 2014, has managed to preserve a watchdog role for the paper, amid the cuts. Seven journalists make up the investigative team; three data visualization specialists support those projects. Projects include ones focusing on eldercare abuse and bad policing.

Two hours south of Portland, Oregon’s largest family-owned daily recently gave up the fight for independence. The Baker family, owners of the well-regarded-over-the-years Eugene Register-Guard, succumbed to a GateHouse offer. The family bought the paper — still a 46,000-circulation daily — in 1927, and I had the misfortune to compete against it when I launched a local alternative weekly in 1975. Its once-dominant local impact has dwindled along with its staff, but its passing marks another turning point for West Coast journalism.

Takeaway: National media still focuses on the big, odd stories like the L.A. Times, but the desolation of the local press continues to worsen across the country each month.

Kudos to ProPublica. I interviewed ProPublica president Dick Tofel in Miami at last week’s Digital Content Next conference, and he noted both ProPublica’s total of 85 national staffers and the 14 it employs at its recently launched Illinois state project. Most tellingly: the title of its just-published annual report: 2017: The Next Frontier Is Local.

Are those vultures circling Boston?

Casual observers tell me it looks to them like Alden, DFM’s owner, is tiring of the business, as it cuts deeply in California and sees seasoned executives like Denver Post publisher Mac Tully and editor Greg Moore leave, fed up.

Au contraire! On Wednesday, DFM more than doubled GateHouse’s offer for the bankrupt Boston Herald, bidding $11.9 million for the property. Sources say the sum surprised GateHouse, which hadn’t even expected DFM to enter the bidding. Second, it believes DFM is overpaying, having far outbid both GateHouse and Revolution Capital Group, the third bidder.

But DFM’s math is different. The company may spend $12 million — a bankruptcy court needs to certify the decision on Friday — but “then again, when they chop half the staff later this year that ought to make some money,” says one source deeply familiar with DFM’s strategies.

Additionally, while DFM has sold several properties in recent years — including the New Haven Register, Salt Lake Tribune, and Berkshire Eagle — it continues to work the market. “DFM has been bidding for everything, from Pueblo to Boston, from Austin to West Palm,” says the insider. “Can DFM suck three years out of everything it can buy? Of course,” he concludes.

Dan Kennedy, deeply knowledgeable on the Northeast news landscape, nails the likely result of the DFM win.

Takeaway: This is vulture capitalism, pure and simple — the textbook practice of buying distressed and dying assets, squeezing them, believing that remaining “meat on the bone” will pay off. The result, often, is bankruptcy and closure. That’s the Alden long-term milking “strategy”: After extracting years of high profits, turn out the lights, or sell the remnants to whoever may want them.

Is The Washington Post really profitable?

Post publisher Fred Ryan laughed Wednesday when I pointed out the considerable skepticism I’ve heard since the Post announced its second year of profit success — with precious little other data — last month. He points to both its digital subscription growth and greater ad selling engagement as the key reasons. While Ryan won’t divulge numbers, the contours of the Post’s march toward profitability can be estimated.

The Post has reached the 1 million digital subscription mark, and that generates about $100 million a year in revenue, almost all of it new in the last several years. You can do the math: about $100 per digital subscriber per year, achieved even with Kindle, Apple News, and Prime discounting and over-the-digital transom subs for the full-price payers. (By comparison, The New York Times, with twice the number of digital news subscribers, averages $125 per sub.)

Then there’s the Post’s more than tripling of digital audience in four years. That hasn’t quite led to a tripling of programmatic ad revenue, but it’s more than doubled — add another $100 million or so a year.

Takeaway: Jeff Bezos’ annual investment in tech and newsroom staff — now up to about 775 — has meant an investment of about $40 million a year. Yet, the reinvestment seems to be paying off. Just Tuesday, the Post announced an expansion of its international news efforts — new bureaus, new staff. That’s a part — a long-term part — of the Post’s tilt toward digital subscription emphasis, ready to harvest payers from the audience it’s quickly grown.

As with The New York Times, and with players as diverse as Business Insider, HuffPost, and BuzzFeed, it’s global that aims to provide small but growing streams of new readers and new payers. Top of the list for both the Post and Times: Canada. It’s well educated, (mostly) English-speaking — and suffering from sprawling news deserts coast to coast, as its major chain Postmedia (the DFM of Canada) continues to retrench.

Is The New York Times a radio station?

The Times and American Public Media announced Tuesday that the paper’s podcast The Daily will now be a broadcast radio show too. The news further certifies The Daily as a phenomenon. Host Michael Barbaro and his expanding stellar crew just celebrated their one-year anniversary, with the Times announcing huge audience numbers.
Now, American Public Media and the Times can pair Marketplace with The Daily in a one-hour, five-day-a-week syndication package.

Expect that many stations in the top 25 markets will carry the new joint hour. The Times gets big branding benefit, of course, but also compensation in the form of some combination of licensing fees and/or advertising extensions.

Takeaway: The podcast revolution has stunned us in its intensity, claiming hours per month of media time, and redefining audio and radio. It may seem confusing to see a podcast morphing into a broadcast radio program. But others have pioneered that shift — especially, recently, NPR.

Critically, podcasts have literally broken the public radio clock. That clock — invisible to us as listeners — has long been as confining as limited number of newspaper or magazine pages or a 30-minute TV newscast. Podcasts, of course, know no such limits. As low-cost, testable concepts of topic and of talent, they’ve introduced many new voices and faces in the world of news and newsiness.

Finally, it’s a case of innovation supporting innovation. “It’s Been a Minute is an interesting case study as it piloted on [the NPR mobile app] NPR One, where we got tons of data and feedback that helped us perfect the concept,” NPR’s Isabel Lara tells me. “Then it became a podcast in June 2017 and ultimately a radio show in October of 2017.” It’s now on 155 stations.

How do you find scale after leaving The New York Times and NPR?

Kinsey Wilson’s found a way: Today, he becomes president of WordPress.com, which now powers more than 29 million websites, even if it sometimes doesn’t get the attention of the bigger platforms.

Fifteen years after its founding, the big question is where does WordPress go now? (Beyond launching a new, truly multimedia interface this summer.)

Founder Matt Mullenweg believes he’s found the right partner to chart that path. “He’s one of the few people on the planet who has built a CMS,” he told me Tuesday. “Many cite him as one of the best people they’ve ever worked for.”

It’s that combo of strategic publishing chops and the ability to create productive teams that has propelled Wilson through careers at USA Today, NPR, and The New York Times.

Wilson talks about the challenge ahead in both big and small terms — about maintaining the open web in a time when massive platforms seemed to have absorbed all the air, for instance.

It’s no surprise that he is also intrigued by the potential of WordPress to help solve the problems of growing news deserts. “WordPress powers a lot of local news sites and it creates an opening to address a crisis that is frankly a pretty alarming one in journalism,” he told me.

As he begins work next month, Wilson will start his WordPress tenure the same way all WordPressers — there are 680 of them — do. He’ll do customer service as a “happiness engineer.” Call in with an issue and you’ll have a 1-in-200 chance of getting the former top NPR and New York Times exec on the line.

Takeaway: Hundreds and thousands of journalists have reorganized themselves, as buyouts and layoffs have decimated daily ranks. I’ve been struck by the lack of powerful yet simple-to-use platforms to support them and their work. Perhaps a changemaker like Wilson can help solve that problem and harness the tools of the time in the nick of time.

What was that thing called digital display?

We’ve talked about it here at the Lab for years: Google and Facebook have eaten almost all worldwide digital ad growth. They’ve left maybe 10 percent of that growth — table scraps — for news and all other ad-supported media. That’s not news, but the reckoning it has prompted is. Finally, publishers are now acknowledging that the first big digital revenue stream — digital display — is going, going gone, just like the print business that’s ebbing away even more quickly.

The Reuters Institute’s recent survey of publishers — mainly in Europe, but with some U.S. representation — emphasizes that point, below.

Fully 62 percent now say “it will become less important over time.” Just 16 percent (and who are they, exactly?) say more important.

Takeaway: Commercial revenue isn’t going away, but digital display — optimized by Google and Facebook — is for news publishers. That’s why the smartest publishers have profoundly move their commercial staffs to the pursuits of branded content, marketing services, video, audio and events — all areas outside the direct line of The Duopoly death ray.

Was poking fun at the Post’s slogan shortsighted?

Yes, it is a dark time. How Democracies Die is getting its just due, including this worthy Fresh Air interview and a recent Fareed Zakaria tout. In the book, historians Steven Levitsky and Daniel Ziblatt give us the long view from Mussolini to Hitler to Hugo Chavez to Recep Tayyip Erdoğan, telling us how elected leaders who may squeak into office can quickly consolidate power. Among the many parallels they note: attacks on news media.

What should I do with the Times?

For a moment, I thought I’d somehow bought the L.A. Times. As I talked with Frank Sesno on CNN’s Reliable Sources Sunday, the chyron below popped on the monitor.

Alas, it will soon be Dr. Patrick Soon-Shiong’s challenge, not mine.

Takeaway: Fake news is everywhere.

As Year One of this presidency turns to Year Two, should we keep this thought top of mind?

Where would the state of our republic be absent The New York Times’ and The Washington Post’s incisive reporting? Together, the two employ only about 2,000 journalists, with far fewer than that assigned to national politics and policy, but the impact of these two great journalistic institutions — institutions willing to stand up to state power — has been proven anew.

Takeaway: Don’t dither about which you should subscribe to. Subscribe to both.